Friday, October 28, 2016

Elementis is a specialty chemical company which makes rheology modifiers (go on - look it up).

The company has two customer groups that are problematic - oil drillers and ship painters.

They provide additives for oil drilling mud to allow difficult drilling. And they supply additives to paints to change their technical characteristics - which have their most profitable use in painting ships.

Both shipping and oil drilling have been difficult.

The company has had six straight profit warnings. Elementis never became unprofitable - just less profitable.

Thursday, October 13, 2016

But the best thing sent to me was a financial history of Facebook. The first copy came from Twitter.

Here are the numbers.

Year Ended December 31,

2014

2013

2012

2011

2010

(in millions, except per share data)

Consolidated Statements of Income Data:

Revenue

$

12,466

$

7,872

$

5,089

$

3,711

$

1,974

Total costs and expenses(1)

7,472

5,068

4,551

1,955

942

Income from operations

4,994

2,804

538

1,756

1,032

Income before provision for income taxes

4,910

2,754

494

1,695

1,008

Net income

2,940

1,500

53

1,000

606

Net income attributable to Class A and Class B common stockholders

2,925

1,491

32

668

372

Earnings per share attributable to Class A and Class B common stockholders (2):

Basic

$

1.12

$

0.62

$

0.02

$

0.52

$

0.34

Diluted

$

1.10

$

0.60

$

0.01

$

0.46

$

0.28

(1)

Total costs and expenses include $1.84 billion, $906 million, $1.57 billion, $217 million, and $20 million of share-based compensation for the years ended December 31, 2014, 2013, 2012, 2011, and 2010, respectively.

(2)

See Note 3 of the notes to our consolidated financial statements for a description of our computation of basic and diluted earnings per share attributable to Class A and Class B common stockholders.

When Facebook had $1.974 billion of revenue it had $1.008 billion of income before taxes.

Twitter is kind of different.

Year Ended December 31,

2015

2014

2013

2012

2011

(In thousands, except per share data)

Consolidated Statement of Operations Data:

Revenue

$

2,218,032

$

1,403,002

$

664,890

$

316,933

$

106,313

Costs and expenses(1)

Cost of revenue

729,256

446,309

266,718

128,768

61,803

Research and development

806,648

691,543

593,992

119,004

80,176

Sales and marketing

871,491

614,110

316,216

86,551

25,988

General and administrative

260,673

189,906

123,795

59,693

65,757

Total costs and expenses

2,668,068

1,941,868

1,300,721

394,016

233,724

Loss from operations

(450,036

)

(538,866

)

(635,831

)

(77,083

)

(127,411

)

Interest expense

(98,178

)

(35,918

)

(7,576

)

(3,255

)

(1,271

)

Other income (expense), net

14,909

(3,567

)

(3,739

)

1,168

(1,064

)

Loss before income taxes

(533,305

)

(578,351

)

(647,146

)

(79,170

)

(129,746

)

Provision (benefit) for income taxes

(12,274

)

(531

)

(1,823

)

229

(1,444

)

Net loss

$

(521,031

)

$

(577,820

)

$

(645,323

)

$

(79,399

)

$

(128,302

)

When Twitter had $450 million of operating losses and $533 million of losses before tax.

There was about $1.5 in difference in costs.

Facebook does more, had more growth runway and had much lower costs.

I received a lot of anecdotes and wild parties and profligate spending, and the plural of anecdote is data - but few things are as convincing as the raw numbers.

The conclusion is inescapable. Jack Dorsey - the Twitter CEO - should be fired.

This should happen regardless of whether Twitter is bought or not. He simply does not deserve the job.

John

PS. Twitter staff - I am not exaggerating. Look at the young man on your left and the young woman on your right. Only one of you three will keep your job.

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The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author. In particular this blog is not directed for investment purposes at US Persons.